Bank Consolidation, Internationalization, and Conglomeration: Trends and Implications for Financial Risk

Gianni De Nicolo, Mary Zephirin, Philip Bartholomew and Jahanara Zaman

No 2003/158, IMF Working Papers from International Monetary Fund

Abstract: This paper documents global trends in bank activity, consolidation, internationalization, and financial firm conglomeration, and explores the extent to which financial firm risk and systemic risk potential in banking are related to consolidation and conglomeration. We find that while there is a substantial upward trend in conglomeration globally, consolidation and internationalization exhibit uneven patterns across world regions. Trends in consolidation and conglomeration indicate increased risk profiles for large, conglomerate financial firms, and higher levels of systemic risk potential for more concentrated banking systems. We outline research directions aimed at explaining why bank consolidation and conglomeration do not necessarily yield either safer financial firms or more resilient banking systems.

Keywords: WP; risk profile; banking system; emerging market; risk-taking choice; Bank Consolidation; Internationalization; Conglomeration; Financial Risk; return on assets; banking firm; financial firm; probability of failure; investment strategies; conglomerate firm; risk taking; choice of return; five-firms concentration ratios; expansion of the scope; Systemic risk; Emerging and frontier financial markets; Commercial banks; Bank deposits; Insurance companies; Eastern Europe; Western Europe; Global; Middle East; Africa (search for similar items in EconPapers)
Pages: 44
Date: 2003-07-01
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Citations: View citations in EconPapers (36)

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